The final communiqué from the G20 summit in Rome reaffirmed a commitment to keep the goal of limiting the global temperature rise to 1.5 degrees Celsius “within reach”. However, it made few concrete commitments beyond an agreement to phase out overseas coal financing this year.

The G20 countries account for roughly 80% of global carbon emissions and represent a diverse range of interests in respect to the energy transition, making co-ordination among these countries significant in addressing decarbonisation more broadly. The communiqué’s most significant short-term commitment was to pledge an end to funding for overseas coal power by end-2021. This followed commitments from China, Japan and South Korea to end such funding earlier this year, joining the remainder of the G7 who had previously made similar commitments. However, the communiqué did not include commitments to end the use or financing of coal power domestically. Several G20 countries, including China and India, depend on coal for power generation, while Australia is a significant coal producer.

Another important area of agreement was the acknowledgement of the impact of methane in contributing to climate change. Methane is the second most prevalent greenhouse gas after carbon dioxide, although it stays in the atmosphere for significantly less time. A formal agreement on methane regulation at the COP26 conference could reduce greenhouse gas significantly; although progress at COP26 is likely to only be one step in a larger process. Co-ordinated action on methane reduction would have a huge impact on the agricultural sector, fracking and waste management practices, which represent the most significant sources of methane emissions.

Overall, the pledges of the G20 countries look modest. The communiqué reaffirmed the G20’s ambition to limit the overall temperature rise to two degrees Celsius, with a further ambition to keep warming below 1.5 degrees. This latter goal appears unattainable without immediate, severe emissions reductions. The absence of several heads of state, including those of Turkey, Brazil, Russia and China, at the COP26 summit will also limit the possibility of a breakthrough.

Impact on the forecast

The modest pledges of G20 members were in line with our expectations. Looking ahead, we expect that the COP26 summit will achieve only limited tangible new commitments from most countries around emissions reductions, mainly due to disputes over financing the energy transition in developing countries. Progress in more targeted areas, such as harmonising green financing definitions or methane regulation, is more likely, but these will not be game-changers.